Volkswagen backed QuantumScape to go public at $3.3 billion valuation

QuantumScape logo

QuantumScape said on Thursday it prepares to go public through a reverse merger with Kensington Capital Acquisition Corp KCAC.N with an enterprise value of $3.3 billion.

QuantumScape is the 10-year-old Silicon Valley battery startup backed by Volkswagen AG, It is a San Jose-based company is a 2010 spinout from Stanford University.

The company said it will form a joint venture with Volkswagen to produce solid-state battery cells, starting in 2024, for the German automaker’s electric vehicles, and ultimately for other automakers.

“Our ambition is to be a (battery) supplier to the industry as a whole,” QuantumScape founder and Chief Executive Jagdeep Singh stated in an interview.

QuantumScape is the recent transportation startup to tie up with a special-purpose acquisition company or SPAC. Recent SPAC-backed transactions include Lidar maker Luminar, electric truck maker Nikola, electric shuttle maker Canoo and electric automaker Fisker.

A SPAC is a shell company that raises money through an initial public offering to purchase a private operating company and take it public in a reverse merger.

Shares of the Kensington SPAC increased 68% to $17.80 at mid-day.

VW has committed over $300 million to QuantumScape. Other corporate investors include Shanghai Auto, which is partnered with Volkswagen in China, and German auto supplier Continental AG.

Venture backers include Bill Gates, Khosla Ventures, and Kleiner Perkins. The Qatar Investment Authority has also taken participation in the recent funding round.

Ahead of the announcement of the merger, QuantumScape raised $500 million from institutional investors, led by Fidelity Management & Research.

The SPAC deal is expected to close in 2020, when the new company will trade on the New York Stock Exchange under the ticker symbol QS.

QuantumScape’s lithium-metal battery utilizes a solid ceramic electrolyte which Singh said is safer compared to a conventional liquid electrolyte. The design replaces the conventional graphite/silicon anode with a lithium-metal anode, speeding up the recharge to 80% capacity in only 15 minutes. Also, its energy density is much higher, exceeding 400 watt-hours per kilogram, which surpasses 250 Wh/kg for the best current lithium-ion batteries.

Kensington is a SPAC headed by investment banker Justin Mirro, a specialist in transportation-related deals who is set to join QuantumScape’s board. Kensington’s directors include Tom LaSorda, former vice chairman of Chrysler; Don Runkle, former vice-chairman of Delphi, and Matt Simoncini, former CEO of Lear Corp.

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